Tuesday, June 5th, 2007

Marina Beach shanty town, Ajegunle, AJ City, Lagos (Courtesy of Femi Jarrett)for a brief history of Ajegunle see Ghetto Radio

Ian Welsh over at Firedoglake wrote a recent column on a problem with western development “advice” and “assistance” that has been particularly damaging to African economies. The problem he points out is hardly the only problem, among others, corruption has had a devastating effect on the economies of many countries, and African countries have suffered more than their share of corruption. Those countries with oil have also suffered from the oil curse, with big incomes, but overall standards of living going down rather than up.

In order to generate cash needed or desired for a variety of reasons, developing countries were advised their greatest resource was land, on which they could grow cash crops. Unfortunately, the kind western high yield agricultural techniques necessary for most cash crops eliminate jobs and displace farmers, who then move to ever expanding slums in the cities. Meanwhile, during the last decades of the 20th century a number of developing countries were getting and following this same cash crop advice, glutting the commodities markets and driving down prices.

The ensuing lack of cash was treated as a failure on the part of the developing country, which was urged to work harder, borrow more, and spend less, in ways such as cutting food subsidies for the people whose livelihoods have been eliminated.

So you’ve gained hard currency, but you’ve lost jobs, most of which will never be recovered. The multiplier effect (the number of jobs created to serve primary jobs) is damn near zero, because the fancy new plantations and huge farms use machines built elsewhere, run on oil pumped elsewhere, need to be repaired by expats who were trained elsewhere, the fertilizer comes from oversees and even the seeds probably even come from overseas.

. . .

So, at the end of the day, by following the advice of western experts you’ve destroyed your rural economy, gone from a country which could feed itself to a net importer of food, created huge slums around your cities, increased the instability of your country – and haven’t modernized.

. . .

When citizens of third world countries talk about how the West in general, and America in specific, is keeping them down, this is much of what they’re talking about. It’s an economic system, which while sold as a benefit to the third world countries following the prescriptions, coincidentally worked out to provide very cheap commodities to the first world for decades, allowed quite a number of loans to be made and didn’t lift a single country I can think of out of poverty. (emphasis mine)

. . .

Those loans were made with the aid of experts who made pretty explicit claims about how things would work out for the better. The common excuse is that “corruption” is why they failed, but even in countries where there was little corruption, they failed. . . . Thirty years later the locals were worse off than they were before the loans were made and the advice was followed.

. . .

And meanwhile, in Asia, countries that didn’t follow this path – countries that built up industry behind trade barriers, didn’t try and convert their farmland into cash crops – countries that rejected the advice of the western experts, who didn’t accept the loans – they’re the ones who have lifted themselves out of poverty. The lesson, one might say, is clear. Beware Westerners giving advice. It’s not that the advice doesn’t work out to someone’s benefit, it’s just that that someone isn’t you.

And why did African countries accept this bad advice so trustingly. I suspect part of the reason is that they had little to no experience as countries. Most of the Asian countries had a country identity long before the late 20th century, even those that may not have been independent or unified for a time. The borders in Africa were artificially drawn by Europeans, and African countries are still working out their identities and relationships within and between these borders. There has been a limited sense of a shared identity and history within many countries. Plus, there was very little local expertise of the sort needed to analyse Western advise, especially for the long term.

The dollar diplomacy, the low or no interest loans China is providing some countries, may offer a way to change course. Of course China is a huge marketer of cheap weapons as well, which are hugely destabilizing. And the US emphasis on military aid is also destabilizing. I’d like to be optimistic, but recent history does not offer much support.